Dec 2014
14
Changes for Employers to Medical Insurance Relief (IT5)
Changes to Medical Insurance Relief include a limit on the tax relief granted on medical insurance premiums, employees claiming relief due on their Tax Credit Certificate (TCC), and employer’s payment of tax relief amounts to the Collector-General.
Limit on the tax relief granted
For insurance policies taken out or renewed after October 15, 2013, the tax relief on medical insurance premiums is capped at €1,000 per adult and €500 per child. Relief continues to be granted at 20%. A child for these purposes includes a student over 18 years and under 23 years who is in full-time education. Prior to the change, tax relief was available on the full gross premium paid at a rate of 20% for all qualifying medical insurance premiums.
Tax relief on private health insurance premiums
Where an individual employee pays medical insurance premiums directly to the medical insurer, they may get a tax credit. This tax credit is granted directly by the insurance company. The premium will be reduced by the amount of the tax credit. This is known as Tax Relief at Source (TRS). This tax relief is at 20% but capped at €1,000 per adult and €500 per child.
An example of when an individual pays 100%:
Gross Premium €1,500
Amount on which TRS is calculated €1,000
TRS (€1000*20%) €200
Reduced premium payable to insurer €1,300
Tax relief on employer paid health insurance premiums
Where an employer pays the medical insurance premiums on behalf of an employee, the Tax Relief at Source (TRS) system does not apply. The employer must pay the tax relief amount of the policy to the Collector-General.
An example of when an employer pays 100%:
Gross Premium €1,500
Tax relief related to employer share (€1000*20%) €200
Net payment made by the employer to the insurer €1,300
Employer pays to the Collector General €200
In these circumstances a Benefit in Kind charge will arise on the gross premium and be subject to PAYE, PRSI and USC. Since the employee has not benefited from the TRS system they will instead be entitled to the tax credit in their Tax Credit Certificate (TCC). Therefore, it is necessary to calculate the amount of relief the employee is entitled to and make the claim to the Revenue Office. The employee’s medical insurance eligibility for tax relief will be stated on the P35 return. If a medical insurance policy was entered into or renewed on or before 15th October 2013 and falls for renewal in 2014, a mixture of the old and new relief will be done.
Nov 2014
25
Irish Employer’s Responsibilities - Payment of Wages Act
The Payment of Wages Act 1991 gives all employees the right to a payslip which shows the gross wages and the details of all deductions. A payslip is essentially a statement in writing from the employer to the employee that outlines the total pay before tax and the details of any deductions from pay. Payslips can be provided in electronic/hard copy format.
Deductions from employees’ pay are allowed when:
• It is required by law i.e. Income Tax, Universal Social Charge (USC) & PRSI
• Provided for in the contract of employment e.g. pension contributions
• Employee has given written consent e.g. trade union subscriptions
• They are to recover an overpayment of wages or expenses
• They are required by a court order e.g. attachment of earnings order
• They arise due to employee being on strike
Where a loss is suffered e.g. employee breakages, till shortages deduction is only allowed where:
• It is allowed for in the employee’s contract of employment
• It is fair and reasonable
• Employee has received written notice
• The amount of the deduction does not exceed the loss or the cost of the service
• The deduction takes place within 6 months of the loss/cost occurring
Failure to pay all or part of the wages due to an employee is considered to be an unlawful deduction and a complaint can be made under the Payment of Wages Act 1991.
To keep up with the latest payroll news, check out our new Bright website. There, you'll be able to register for any of our upcoming payroll webinars and download our payroll guides.
Nov 2014
5
Local Property Tax 2015 - Ireland
The third year of LPT is fast approaching!!! Revenue will be writing to the majority of homeowners shortly, the letters will give homeowners the opportunity to decide how and when they would like to pay their LPT. The letter will include the Property ID and PIN and will also confirm the amount due for 2015. If you wish to avail of a phased payment option such as Direct Debit/Deduction at Source you should confirm your payment method by the 25th November 2014 to allow sufficient time for the payment method to be in place for the beginning of the year.
Revenue will not be writing to homeowners already paying LPT through deduction at source or by direct debit instead their payment method will continue in 2015.
A number of Local Authorities have reduced the rate of LPT for 2015; Revenue will automatically make those deductions. Homeowners can confirm the amount of LPT due for 2015 on their property by accessing their LPT record online using their PPS Number, Property ID and PIN.
Key Dates for 2015:
• 7th January 2015 – Deadline for paying in full by cash, cheque, postal order, credit card or debit card
• January 2015 – Phased payments by Deduction at Source and regular cash payments through a Payment Service Provider to commence in January
• 15th January 2015 – Monthly Direct Debit payments commence and will continue on the 15th of each month thereafter
• 21st March 2015 – Single Debit Authority payment deducted
If you are the liable person for the residential property on 1st November 2014 you have to pay LPT for 2015 even if it is sold before the end of 2014.
Full details can be found on Revenue’s website www.revenue.ie
Oct 2014
18
Illness Benefit
Illness benefit is liable to PAYE but not USC and PRSI. A lot of confusion arises on the employers’ role of the taxation of the benefit. If an employee is out sick for more than 6 days they can claim illness benefit from the Department of Social Protection (DSP). There are a couple of scenarios that will arise when this happens:
• You will receive a letter from the DSP stating that they are receiving a cheque for Illness Benefit and advising you on the amount liable to PAYE
• You must reduce the pay by the amount stated by the DSP in the weekly/monthly basic and input the Illness Benefit in the correct section on the payroll
• You haven’t had any correspondence with the employee, in this case you must assume they are in receipt of the benefit and tax them. The daily rate is €31.33 and the weekly 6 day benefit is €188.
• If the employee has opted for the employer to receive the cheque it still needs to be taxed in the Illness Benefit section on the payroll.
• If it is your company's policy to pay an employee while out sick you must reduce the weekly/monthly pay by the amount of Illness Benefit they are receiving.
• If is not your companies policy to pay an employee while out sick their pay must then be zeroised.
• If the employee returns and you’ve inputted the benefit into the system and they weren’t receiving the benefit , simply go to the illness benefit section and put a “–“ figure of the amount you deducted. This will refund any tax deducted, i.e. -€188
Oct 2014
12
Irish Employers Save 57% on Staff Rewards this Christmas!
Employers can save up to 57% on staff rewards by taking advantage of the Government Small Benefits Exemption Scheme.
To qualify for the tax exemption only one non cash bonus to a maximum of €250 may be paid to each employee in any tax year. It is often called the Christmas bonus scheme due to the fact that it is usually paid at Christmas time. Employers should be warned that if the value of the non cash benefit exceeds the limit of €250 then the full value of the benefit will be subject to PAYE, PRSI and USC.
Sep 2014
24
e-Day has come and gone - 5 practical tips!
The government, its departments and agencies no longer issue cheques to or accept cheques from businesses. From a business perspective this has an impact on payments to government such as VAT payments and any employer deductions to payroll made at source.
Here are five practical tips published by the Irish Independent to assist businesses in being ready for life without cheques:
1.Review your historic payments to government or its agencies in order to understand the typical value of these payments, how often they are paid, and identify the date the next payment is due in order to understand what impact this will have on cashflow.
2. If these payments were previously made by cheque, you will need to find out the recipient’s payment details including BIC / IBAN, in order to make a successful payment on time to avoid late payment penalties.
3. Understand your current processes for making payments to identify which have to change, and ensure that you are aware of the SEPA regulations on timelines for submission of electronic payments. If pay-runs currently happen at a particular time of the week or month, these may need to change in order to fulfil the requirements under SEPA.
4. Recognise that e-Day is simply the next step under the National Payments Plan that will fundamentally change the way that businesses manage payments as the market shifts from cash and cheque to electronic formats. You will need to ensure efficient cash flow management and enable faster payments into your business by facilitating your customers to pay you electronically or offer card payments
5. Whilst e-Day might necessitate process change in your business which is typically uncomfortable and time consuming, it is important to bear in mind that cheque payments typically carry longer clearing times, are more costly and lead to longer delays in getting paid as a business.
Sep 2014
22
Irish Employers - show your staff your appreciation!
Have you employees with 20 plus years of service? If so why not say thank you with a gift.
Revenue Commissioners offer tax relief on long service awards, which is considered to be at least 20 years of service. Tax relief on long service awards can be in addition to the small benefit exemption.
Employers can reward employees for long service with tangible articles with a value up to a maximum of €50 per year of service, starting at 20 years of service and every 5 years thereafter.
20 years of service – value up to €1,000
25 years of service – value up to €1,250
30 years of service – value up to €1,500
35 years of service – value up to €1,750
The award must be a tangible article e.g. a gold watch, it does not apply to awards made in cash.
Tax will not be charged provided:
• The cost to the employer does not exceed €50 per year of service
• The award is made in respect of service not less than 20 years
• No similar award has been made to the recipient within the previous 5 years
Where any of the conditions are not met PAYE, PRSI & USC must be applied on the full amount.
This concession applies to directors as well as employees.
Full details can be found on Revenue’s website www.revenue.ie
Sep 2014
8
Updated Revenue Material
Revenue have recently updated the following payroll-related forms, leaflets and manuals on their website:
Form 12A
· A Form 12A is an application for a Tax Credit and Universal Social Charge Certificate. This form must be completed by people who are commencing work in Ireland for the first time. The updated version has replaced the One Parent Family Tax Credit with the Single Person Child Carer Tax Credit.
Leaflet IT45
· This leaflet provides information on Income Tax, Capital Gains Tax and Capital Acquisitions Tax for over 65s. It also includes other general information on PRSI and USC.
Leaflet IT3
· This leaflet explains the procedures that a separated person should take to notify Revenue of the breakdown of a marriage, civil partnership or cohabitating relationship and also explains what tax credits and reliefs that the individual may be entitled to following the breakdown of the relationship.
Consolidated USC Manual
The manual includes specific sections on the following payroll-related topics:
· Benefits in Kind
· Medical Cards
· Redundancy Payments
Local Property Tax (LPT) Manual
This has now been updated to include the following points:
Arrears of the Household Charge which were outstanding on 1st July 2013 were replaced with a €200 LPT charge. Properties that have a significant level of pyrite damage are exempt from the charge to LPT. The update clarifies that the pyrite exemption also applies to the €200 Household Charge liability.
· A new instruction has been added which explains how LPT appeals are dealt with.
Jul 2014
10
Local Property Tax (LPT) - Reminder for Employers
Property owners in employment or in receipt of an occupational pension can opt to pay their LPT through deduction at source from salary or pensions. In addition, where property owners fail to pay their LPT, Revenue may instruct their employer/pension provider to deduct the payment at source. The same form or instruction issues to the employer/pension provider whether it is a “voluntary” or “mandatory” instruction.
Revenue are writing to employers who appear to have outstanding LPT liabilities on record for the 2013 tax year. Revenue will demand payment as provided under Section 960E (2) of the Taxes Consolidation Act 1997. The demand will be followed up with debt recovery/enforcement action as necessary. This may include interest, which will be calculated from the due date up to the actual date payment is received. Penalties may also be imposed for failure to deduct and pay over the LPT as instructed.
Where an Employer’s Tax Credit Certificate (P2C) was received for an employee for the 2013 tax year with LPT liability but the employer failed to account for the LPT, they should immediately file an amended P35 and P35L and pay any balance outstanding.
For the 2014 tax year instructions are continuing to issue in relation to LPT for 2014 and arrears of Household Charge (HHC). Employers/pension providers who receive a P2C instruction should implement it immediately.
Where an employer/pension provider does not deduct the LPT as instructed, the employer/pension provider becomes liable for the amount due. Non-operation of the instruction may result in interest charges, penalties, refusal of a tax clearance cert and increases the chances of a tax audit.
May 2014
1
Eircodes - the new postcodes for Ireland
Every address in Ireland will receive its unique Eircode in Spring 2015.
"The Eircodes will help the public, businesses and public bodies to locate every individual address in the State. Eircodes will bring many benefits to the daily lives of people, householders and businesses. Currently, around 35% of addresses - mainly in rural areas - do not have a unique name or number in their address. With Eircodes, delivery of services and goods will be much easier and quicker to these addresses." - www.eircode.ie
When people receive their Eircode next year, they will not need to change their address. They will just add the Eircode whenever it is needed or useful, so it will be very easy to start using it straight away.
Each Eircode has seven-characters that are unique to each mailing address. The seven characters are divided into two parts – a Routing Key and a Unique Identifier.
For businesses, some of the main things to consider are:
- Stationery, customer forms, websites and other places where your address is shown. Perhaps, plan print stocks of existing stationery items accordingly in the run up to Eircode Launch Date in Spring 2015.
- If you use a software package in your business, you will need to check with its supplier as to their plans for when and how they intend to incorporate Eircodes into the package.
- Some staff training may be needed especially if your systems or processes have changed somewhat to take advantage of Eircodes.
Our software offerings will all be updated to include an extra address field for eircodes and will incorporate all the required validation logic.
